Smart investors spend a lot of time searching for relative strength. During a market sell-off like the one this week it pays to look for the sectors that remain resilient. One of the very few sectors that remained remarkably resilient, even showed some strength, is the cannabis sector. This should not come as a surprise for anyone who read our Cannabis Stocks in Canada Forecast for 2019, especially our Emerald Health Therapeutics Stock Forecast for 2019 (EMH.V). Cannabis stocks showed remarkable resilience when broad markets sold off this week, what exactly does this mean?
First of all let’s repeat one major event that is about to take place next week. The Canadian government is about to legalize recreational usage of cannabis on Wednesday October 17, 2018.
Cannabis investors will be looking in the first days after the legalization of weed in Canada for clues on usage. How fast will cannabis adoption grow, are initial estimates accurate or conservative, and so on.
Regardless, the fact that the cannabis stock sector remained resilient likely means something. Cannabis investors are not inclined to give up their stocks as they likely believe this sector has huge growth potential.
That’s how we read the chart of the ‘Horizons Marijuana Life Sciences Index ETF ‘, symbol HMMJ, trading on the Toronto Stock Exchange. This ETF seeks to replicate the performance of the North American Marijuana Index, net of expenses. The Index is designed to provide exposure to the performance of a basket of North American publicly listed life sciences companies with significant business activities in the marijuana industry. Note that it is a proxy for the sector, it certainly not only tracks Canadian stocks and has a broad variety of cannabis stocks.
This week’s chart shows a consolidation around its breakout level at 23.50 points. There is hardly any other sector chart out there that remained resilient like the one below in the last 5 trading days.
Moreover, we remain concinved that Emerald Health Therapeutics, symbol EMH.V, has great potential going forward.
We are in the final stages of publishing our premium cannabis stocks report with detailed insights on top cannabis stocks in Canada and the U.S. Premium crypto subscribers will receive this report for free, you can become a member here.